THE number of people claiming unemployment benefits has fallen to its lowest level since October 2008, new data will show.

Economists predict that the Office For National Statistics (ONS) will say on Wednesday that the number of people claiming benefits in July fell by 30,000 to 1.014 million, the lowest level in nearly six years.

At the same time, the ONS is expected to report that the unemployment rate has fallen from 6.5 per cent to 6.3 per cent. At the start of the year, the unemployment rate was 7.4 per cent.

This week will also see the ONS release its latest update on Britain’s economic performance. The statistics body is expected to reiterate that UK gross domestic product (GDP) grew by 0.8 per cent during the second quarter, confirming that the economy has returned to pre-credit crunch levels.

Given the strong growth in GDP and bullish results from recent economic activity indicators, such as purchasing managers index (PMI), economists predict that the unemployment rate will fall below 6 per cent before the end of the year.

Chris Williamson, chief economist at Markitt, said: “Unemployment should come down further from 6.5 per cent to 6.3 per cent, maybe even 6.2 per cent and it should certainly fall below 6 per cent by the end of the year.

“The official figures are backward looking, but the PMI surveys in June were at record levels.”

However some economists predict that the rapid decline seen in the unemployment rate will start to moderate after that.

The jobs recovery has been exceptionally strong, it’s been running ahead of the macro-economic recovery

IHS Global Insight UK and European chief economist Howard Archer agreed and said unemployment will continue to fall, but at a “steady, slightly slowing rate over the coming months”.

He added: “While we expect the economy to continue growing at a healthy clip, we suspect the rate of expansion will edge back from the third quarter of 2014 to be centered in a 0.6 to 0.7 per cent quarter-on-quarter range after growing by 0.7 to 0.8 per cent quarter-on-quarter since the second quarter of 2013.”

On Wednesday the Bank of England will release its quarterly inflation report, which will be securitised by the market for hints at when interest rates will rise.

Archer said: “If the August Quarterly Inflation Report is largely upbeat on growth forecasts that unemployment will continue to come down, it will advance the case for an interest rate hike before the end of 2014.”